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Lafayette hospital privatization runs over budget in Louisiana

Bruce Greenstein, Jerry Phillips, J.t. Lane

Former DHH Undersecretary Jerry Phillips, right, said the hospital privatization deals are in good shape, despite cost overruns at a facility in Lafayette and a recent dispute over financing arrangements with the federal government. (AP Photo/The Advocate, Travis Spradling)
(AP Photo)

Gov. Bobby Jindal's
privatization deal for the LSU hospital in Lafayette was running $6
million over budget by April's end, with two months remaining in the
fiscal year, raising questions about whether the contracts could cost
more than anticipated.

The overspending was detailed in an update
to lawmakers about payments made for the outsourcing contracts involving
nine state-owned, LSU hospitals for the budget year that ends June 30.
The hospitals are safety-net facilities that care for the poor and
uninsured.

The Department of Health and Hospitals said
fluctuations in the individual hospital budgets were anticipated but it
expects the numbers to balance out across all the deals.

"Overall,
the Medicaid budget which includes the partnerships is on track and
within budget," DHH spokeswoman Olivia Watkins said in a statement.

Daryl
Cetnar, a spokesman for Lafayette General Medical Center, which now
manages the LSU hospital in Lafayette, said the facility has increased
services, expanding hours at its orthopedics clinic, opening eight more
inpatient beds and adding new cardiovascular services.

He said the hospital's billings reflect that increased patient care.

"As
we reopened them, the need was there and they immediately started to
fill up," Cetnar said. "The demand is just very high and we're doing our
best to see as many patients as possible, so that's resulting is in the
overages."

However, Cetnar said the state-owned hospital remains below the contractually-set cap for payments for health care services.

The
state's budget for the hospital deals this year didn't include all
spending allowed under the contracts, but rather estimates made by the
Jindal administration of what patient care billings were expected.

Watkins said the budget projections "were based upon historical patient volumes."

No
other hospitals so far have exceeded budget estimates, but lawmakers
say the research foundation running the university's Shreveport hospital
is asking for money above its budget allocation.

But a reworking of the
financing arrangement could have the state forced to repay dollars that
federal officials might deem improper.

Jindal's commissioner of
administration, Kristy Nichols, said Louisiana could owe about $200
million. But lawmakers said they've heard figures topping $500 million
or more.

In an analysis, the Legislative Fiscal Office said the
state's potential repayment is unknown, depending on how the U.S.
Centers for Medicare and Medicaid Services determines what was
improperly spent. The state will have spent about $378 million in
federal Medicaid money on the rejected financing plans through the
current budget year, according to the analysis.

LSU health care
adviser Jerry Phillips tried to allay concerns Friday with the
university's Board of Supervisors, saying CMS supports the privatization
efforts but just wants a piece of the lease payments reworked.